FTX advisors have found more than $5 billion it could sell to repay creditors, judge tells
FTX advisors have found over $5 billion in cash or cryptocurrency to use to repay creditors, a court has heard.
Attorney Andrew Dietderich told Delaware Bankruptcy Judge John Dorsey that the firm was working to liquidate the assets, which alone have a book value of $4.6 billion in “non-strategic investments.”
It is in addition to the $425 million in crypto held by the Securities Commission of the Bahamas following the company’s implosion last year.
In November, FTX lost more than $8 billion of its clients’ money and owed its top 50 unsecured creditors a combined $3.1 billion.
Disgraced FTX founder Sam Bankman-Fried has asked a federal judge to grant him access to roughly $465 million worth of Robinhood stock to pay his legal fees
The judge granted new FTX CEO John Ray III – who succeeded Sam Bankman-Fried – the right to keep the identities of his nine million accounts secret
Attorney Andrew Dietderich told Delaware bankruptcy judge John Dorsey (pictured) that the firm was working to liquidate the assets, which alone have a book value of $4.6 billion
Dietderich informed the hearing that cash was still missing from the claims against customers, but the total amount remained unclear.
Meanwhile, the judge granted new FTX CEO John Ray III – who succeeded Sam Bankman-Fried – the right to keep the identities of his nine million accounts secret.
Dietderich told the hearing the firm had identified about 120 billion transactions sent on the fallen crypto giant’s platforms.
Wednesday’s hearing began with the judge announcing a letter he received from four US senators asking him to appoint an independent examiner.
They claimed FTX attorneys may have conflicts that would make it difficult for them to conduct an independent investigation.
But Dorsey said the letter would not affect him. He added: “It is an inappropriate ex parte communication. It will not affect my decisions.’
Company attorney Andrew G. Dietderich said the company is working to monetize assets with a book value of $4.6 billion
It comes just days after the DOJ seized $464 million worth of Robinhood stock owned by disgraced FTX founder Sam Bankman-Fried, despite his request to access the stock to cover his legal fees pay.
In a Friday court filing, federal prosecutors confirmed the seizure of 55.3 million Robinhood shares and an additional $20.7 million in cash from British brokerage firm ED&F Man Capital Markets under criminal and civil foreclosure orders.
The shares were held by Emergent Fidelity Technology, a company 90 percent owned by Bankman-Fried, while Zixiao “Gary” Wang, another former FTX executive, holds a 10 percent stake.
Robinhood stock has been the subject of legal wrangling in the bankruptcy proceedings of collapsed crypto exchange FTX, but the DOJ’s seizure renders the matter moot and puts the shares out of reach of either party for now.
FTX’s current management, led by CEO Ray III, had sought an injunction to freeze the shares to settle the company’s creditors.
The Justice Department seized $464 million in Robinhood stock owned by disgraced FTX founder Sam Bankman-Fried (left)
Bankman-Fried’s attorneys had argued he needed access to the shares to pay his legal fees
In a court filing filed on Friday, federal prosecutors confirmed the seizure of 55.3 million Robinhood shares and an additional $20.7 million in cash from British brokerage firm ED&F Man
Lawyers for Bankman-Fried responded in a court filing Thursday, arguing Emergent had no part in the bankruptcy and saying he needed access to the stock to pay his legal fees.
Bankman-Fried, whose net worth was once estimated at $15.6 billion, says he has about $100,000 in cash reserves after the collapse of his cryptocurrency exchange. He was later charged with fraud.
After pleading not guilty to eight state counts of fraud and conspiracy earlier this week, he faces a costly lawsuit if the matter goes to trial.
Zixiao “Gary” Wang owned 10% of the holding company that held Robinhood stock
“Bankman-Fried needs a portion of these funds to pay for his criminal defense,” his attorneys argued in last week’s filing.
Bankrupt crypto firm BlockFi, FTX, and Antigua bankruptcy trustees have all made claims on the Robinhood shares, along with Bankman-Fried’s own claim in bankruptcy court.
But the Justice Department didn’t believe the Robinhood shares were owned by a bankruptcy estate, US Attorney Seth Shapiro told US Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy, last week.
Shapiro said competing claims to shares in the stock-trading app could be worked out in a forfeiture.
Prosecutors have accused Bankman-Fried of involvement in a years-long “scam of epic proportions” that may have cost investors, customers and lenders billions of dollars by using customer deposits to shore up his hedge fund Alameda Research.
Bankman-Fried pleaded not guilty to charges of wire fraud and conspiracy. He has acknowledged risk management failures at FTX but said he does not believe he is criminally responsible.
Last May, Bankman-Fried bought about 7.42 percent of Robinhood’s stock through Emergent, using funds borrowed from Alameda Research, according to an affidavit he filed with an Antigua court in December.
Bankman-Fried said he owns 90 percent of Emergent and Wang, another former FTX executive, owns 10 percent.
Wang has pleaded guilty to fraud allegations over the FTX collapse and is working with prosecutors to seek leniency.
Shapiro also said prosecutors seized US bank accounts linked to FTX’s Bahamas-based business, known as FTX Digital Markets.
Court records show that accounts at Silvergate Bank and Farmington State Bank, which operates as Moonstone Bank, held approximately $143 million
James Bromley, an attorney for FTX, told Dorsey that none of the assets to be seized are currently under the direct control of any of the FTX Chapter 11 companies. He said the Robinhood shares are the subject of litigation and that it is an “open issue.” about who they belong to.
Robinhood stock, which opened Monday at $8.40 per share, is also being claimed by BlockFi Inc, another bankrupt crypto firm, as well as liquidators from Emergent, which is in bankruptcy proceedings in Antigua, where it is incorporated .
BlockFi is suing Emergent to seize Robinhood stock pledged by Alameda as collateral to guarantee repayment of a loan made by BlockFi. Two days after the pledging, Alameda filed for bankruptcy along with FTX.
BlockFi did not immediately respond to a request for comment from DailyMail.com Monday morning.
https://www.dailymail.co.uk/news/article-11624539/FTX-advisers-5-billion-sell-repay-creditors-judge-told.html?ns_mchannel=rss&ns_campaign=1490&ito=1490 FTX advisors have found more than $5 billion it could sell to repay creditors, judge tells